Many Germans think of the world of finance as a minefield best left alone. A representative survey carried out by the Association of German Banks has shown that the majority of those surveyed do not spend enough time managing their finances and do not understand important financial terminology. No surprise then that many of them are uncertain when it comes to financial matters. The gaps in their knowledge show clearly that there is a desperate need for better financial education in Germany to ensure that it is suited to mastering the challenges offered by the modern world.
Interest in financial and economic issues is waning
Most Germans, it seems, do not think about economics or finance all that often. Certainly, the interest reflected by the survey, carried out in the spring, was moderate at best. Only one in ten respondents said that they “strongly agreed” that they were interested in these issues. An additional fifth of those surveyed did at least say they “agreed” that they were interested in these issues. What is most alarming about these numbers is that they show that interest in the subjects has dropped dramatically since 2022 (41%). It seems that fewer and fewer people are actively engaging with basic economic principles, principles that also have an effect on their personal future.
In fact, less than half of those surveyed (44%) look at their own finances on a regular basis. And of course, there is no way to tell from the survey how effectively they deal with those finances. On the one hand, the fact that older people examine their finances more often is certainly positive, but on the other hand it begs the question as to whether young people are simply not concerned enough about financial matters. It is therefore alarming that among people of working age, that is those who have not yet retired, only 35% “strongly agree” with the statement that they have thought seriously about retirement provisions: four years ago, over half of respondents (56%) had done so.
Dubious self-confidence
One interesting result from the survey comes from respondents’ self-assessment of their own financial competence. Almost 60% of those surveyed believe that they are well informed on financial matters. But this self-assessment stands in stark contrast to their actual financial knowledge. For example, a significant number of respondents had no idea what is actually happening on the stock market. This deficit in knowledge is particularly concerning at a time in which the stock exchange has an ever-larger role to play for both retirement provisions and building wealth. Even more concerning is the fact that while two-thirds of those surveyed understood the term ‘inflation rate’, only about one-third knew the actual rate of inflation at the time of the survey.
These types of gaps in basic knowledge could have serious consequences. After all, inflation influences more than just the price of day-to-day living; it also affects the purchasing power of our savings, the amount and purchasing power of the pension payments we will receive, and so much more. Those who do not understand the affects of inflation can hardly make well-founded financial decisions.
Respondents strongly in favour of more financial education
Considering the gaps in financial knowledge revealed by the survey, it is hardly surprising that a strong majority of respondents were in favour of more economic and financial education in schools. Almost three-quarters (74%) were in favour, and over two-thirds (69%) supported calls for a dedicated subject in schools focused on teaching children the ins and outs of economics and finance. It is interesting to note of those in favour of teaching economics in school, most wanted the class to focus on subjects such as budgeting, retirement provision options and information on financial and economic systems. These subjects are indeed essential to a well-rounded, basic financial education, and should take priority.
The survey results show that awareness of the importance of financial education in Germany has become a strongly anchored belief, for which there is a corresponding broad consensus among Germans. This is a clear signal to politicians to really push to implement measures that use modern approaches to promote more comprehensive and accessible financial education. Financial education is not an option, it is a necessity, it is not a choice, it is a duty. It is essential to ensure that everyone can make well-founded, sustainable decisions for their financial future.
